YOUR PENSION PLAN 1

MEMBER BOOKLET FOR MEMBERS WHO JOINED THE BAA PENSION SCHEME ON OR AFTER 1ST APRIL 1991 How do I maintain a good standard of living in retirement, ensure I am protected if I have to stop working due to ill health and that my family are financially secure when I die? The Gatwick Airport Pension Plan helps you with all the above, offering: • a pension income at retirement • an optional tax-free cash lump sum • protection for your family should you die • pension benefits should you be forced to retire early through illness or injury Over 12 million people in the UK are not saving enough to have a good standard of living at retirement and many of these have no insurance to cover them or to help support their family in the event of their death. We can help you make sure that you are not one of them. 2

This booklet describes the benefits in the Gatwick Airport Pension Plan for staff members who joined the BAA Pension Scheme on or after 1st April 1991. If you are a fire service member and/or you joined the BAA Pension Scheme before 1st April 1991 please refer to the special inserts for details of the key differences that apply to you.

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USEFUL CONTACTS

CONTENTS

The Plan is administered on behalf of the Trustee by Lane Clark & Peacock LLP

This is the explanatory booklet for the Gatwick Airport Pension Plan. It is based closely on the wording in the BAA Scheme Booklet. This should make it easy for all those who transferred their benefits from the BAA scheme when the Plan was created to understand the basis on which the benefits and contributions have been replicated at the time of transfer.

Further information for Fire Service employees is included in an additional leaflet provided to these employees.

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REWARDING YOUR HARD WORK BENEFITS AT RETIREMENT Page 7

IN SICKNESS AND IN HEALTH BENEFITS Page 9

PROTECTING YOUR FAMILY DEATH BENEFITS Page 10

SUPPORTING YOUR MEMBERSHIP WHO PAYS Page 12

SPECIAL INFORMATION FOR PART-TIME EMPLOYEES Page 15

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Confused about pension terminology? At the back of this booklet you will find definitions of some ‘key terms’. Every time these terms appear they are highlighted in green.

Please contact the Pensions Team at LCP: • for any questions relating Gatwick Airport Pensions to benefit illustrations Lane Clark & Peacock LLP 30 Old Burlington Street • to find out how much you London need to pay to receive a W1S 3NN higher level of pension Tel: 020 7439 2266 [email protected] • to find out what you would get if you transfer in benefits from another pension arrangement

Please contact MyHR at Gatwick: • for any queries relating MyHR to payroll deductions 4th Floor Spectators • if you wish to opt out Gatwick Airport of the Plan; RH6 0NP • if you wish to complete or update your Expression of Wish form to register who you would like to receive benefits in the event of your death.

Tel: 0800 111 4501 internally on ext. 4501 [email protected]

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YOUR QUESTIONS ANSWERED Page 16

GENERAL INFORMATION Page 18

STATE PENSION BENEFITS Page 20

• for copies of the Plan’s official documents, such as the Report & Accounts, Statement of Investment Principles or Trust Deed & Rules.

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1. REWARDING YOUR HARD WORK 1.1. BENEFITS AT RETIREMENT 1.1.1. What pension will I receive? The Gatwick Airport Pension Plan offers you valuable benefits at retirement, including a regular pension income and the option of a tax-free cash lump sum. • You would normally retire from the Company and take your pension on your 60th birthday (your Normal Pension Date), although you may choose to stay in service after this date. • You will generally receive a proportion of your Final Pensionable Salary for each year of service, up to a maximum of 36 years. The pension will be paid for the rest of your life and will generally increase each year by 5% or by the change in price inflation if less. The Trustees may grant additional increases if they choose, with the Company’s consent. • As your Pensionable Salary does not include any shift pay, if you are a shift worker you will build up an additional Shift Credit each year which will add to the level of Pensionable Service used to increase the pension you will receive at retirement. • You may exchange some of your pension income in return for a tax-free lump sum at retirement. You can use the following calculation to work out the pension you will receive at retirement:  Final Pensionable Pensionable x Service Salary (max 36 years) 54 Don’t forget that you will pay tax on your pension income, in the same way that you do on your income from employment. The tax will be deducted from your pension payments before you receive them. 6

Example: A member whose Final Pensionable Salary is £15,000, who retires at 60 with 36 years’ Pensionable Service. The retirement pension is: £15,000 x 36 = £10,000 a year 54 Technical details: If you are a shift worker, Shift Credits can take your Pensionable Service over the normal maximum of 36 years. 1.1.2. As a shift worker, how will the additional amount of pension I will receive in relation to my shift pay be calculated? Your Pensionable Salary does not include any shift pay. Therefore, to ensure your pension takes into account the additional amount you earn in shift pay, you will receive a Shift Credit each year, that is added to your Pensionable Service when calculating the pension benefits you will receive at retirement. This Shift Credit is calculated as follows: Annual 365 x shift pay = (days) Pensionable Salary

number of days shift credit

Shift Credits will be added each year that you receive shift pay. If you stop shift work, then you will not earn any more Shift Credits, but credits you have already built up will count towards your Pensionable Service. Example: If, at the end of the year, your Pensionable Salary is £15,000 and you received shift pay of £3,000 the additional amount of Pensionable Service earned (Shift Credit) over that year would be calculated as follows: 3,000 365 x = 73 days 15,000

1.1.3. How do I work out what cash sum I might receive? The amount of cash you can take is restricted by HM Revenue & Customs. The maximum amount of tax-free cash you can receive from the Gatwick Airport Pension Plan is restricted to 25% of the total value of your benefits after any cash is taken, or 4.4 times your first year’s pension income. You will be provided with details of the maximum tax-free cash sum that you can take near to your retirement. Guideline figures: First year’s pension income Maximum tax-free cash £10,000 £44,000 £15,000 £66,000 £20,000 £88,000 £25,000 £110,000

1.1.6. What if I work for Gatwick past the age of 60? You can continue to contribute to the Plan and take your pension when you stop working. 1.1.7. How will I receive my pension? Your pension will be paid monthly in arrears, directly into your bank or building society account. Example: A member retires after 27 years’ Pensionable Service aged 57, with a Final Pensionable Salary of £15,000.

1.1.4. If I take a cash lump sum, how will this affect the pension I will receive? For each £13 of cash taken your pension will be reduced by £1 a year (subject to continued HM Revenue & Customs approval). You should contact the Pensions Team or MyHR at Gatwick for further information. 1.1.8. 1.1.5. Can I retire early? Yes. You can normally start taking your Gatwick Airport pension at any time after the age of 55. If you joined the BAA Pension Scheme before 6th April 2006 and retire directly from service you can start taking your Gatwick Airport pension at any time after the age of 50. The pension you will receive will be based on your Pensionable Service and Pensionable Salary when you retire. However, as you are retiring early and your pension will therefore be paid for longer, your pension will be reduced by ¹ ³% for each complete month by which you are under the age of 60 (that is 4% for each complete year).

The early retirement pension is: £15,000 x 27 £7,500 a year = less early 54 retirement For 3 years’ early retirement, this deduction is 12% (4% x 3yrs): £7,500 x 12% = £900. Therefore, the pension will be £7,500 - £900 = £6,600 a year What increases will my pension receive in payment? Once in payment, your pension (other than any Guaranteed Minimum Pension – see below) will be increased each year by 5% or in line with the change in price inflation if less. Your Guaranteed Minimum Pension (i.e. pension earned prior to 1997 as a result of being contracted out of the State Second Pension) will be increased as required by statute. Increases to GMPs are complicated: not all of your GMP will necessarily be increased by the Plan and there are special rules as to how GMP increases work in relation to your state pension benefits. Please contact LCP or MyHR if you need further assistance with this. The Trustees may grant additional increases if they choose, with the Company’s consent. 7

2. IN SICKNESS AND IN HEALTH Technical details Because pensions are a tax efficient way for you to save for your future, the Government restricts the amount of pension savings that you can build in your lifetime without incurring additional tax. This is known as the Lifetime Allowance. This allowance is high enough not to affect most people – in April 2010, the limit was £1.8 million, although the Government announced in October 2010 that it will reduce to £1.5m. To calculate the value of your pension savings you should multiply the annual pension income you expect to receive by 20. Using the example on the previous page, an annual pension income of £6,600 would equate to a total pension saving of £132,000. If you are approaching the Lifetime Allowance you may wish to take independent financial advice on the best course of action.

Not everyone is lucky enough to remain in good health throughout their working life. The Gatwick Airport Pension Plan enables you to take a pension should you have to retire early due to ill health or injury.

you will receive are calculated, using your Pensionable Salary and completed Pensionable Service at the date of your ill health retirement, but assuming you had completed an extra five years’ Pensionable Service (or up to your Normal Pension Date if you are within 5 years of that date).

• If you are retired by the Company because you are unable to continue with your current employment or any other occupation, you will be able to take your pension benefits early without penalty. Your pension will be based on your Pensionable Salary at the time of your ill health retirement and the length of service you would have completed had you continued working for the Company until your Normal Pension Date.

2.1.3. Will the pension I receive if I retire early due to ill health take into account any shift pay I might have received had I not retired due to ill health? Yes. If you are a shift worker your Pensionable Service will be calculated assuming that you would have continued to receive the same amount of shift pay and build the same level of Shift Credits that you received in the year to the date of your ill health retirement.

• If you are retired by the Company because you are unable to continue to work in your current role or any other role with Gatwick due to ill health or injury, but you could work for another employer, you will receive a pension based on your Pensionable Salary at the date of your ill health retirement and an enhanced period of Pensionable Service.

So, if you received 73 days Shift Credits in the year to the date of your ill health retirement, your ill health pension would be calculated assuming you receive 73 days Shift Credit for each year of enhanced Pensionable Service.

2.1. ILL HEALTH BENEFITS

2.1.4. Will my age affect whether I can receive an ill health pension? No. If you are suffering from serious ill health or incapacity, you can be retired by the Company and start receiving an ill health pension at any age.

2.1.1. What pension benefits would I receive if I can no longer work for Gatwick, or in any other occupation? This is referred to as ‘total incapacity’. If you are retired by the Company because of total incapacity the benefits you will receive are calculated as for normal Technical details: retirement, but using your Pensionable Salary at the The Company and Trustee will take full medical date of ill health retirement and the level of Pensionable advice before agreeing to the payment of an ill health Service you would have completed if you had worked pension. If you are retired due to ‘incapacity’ and then for Gatwick until your Normal Pension Date. become able to undertake further employment, the level of ill health pension may be reduced or, in the As with normal retirement, you will be able to give up case of your ability to return to full work, stopped. some of your pension in return for a tax-free lump sum. There is an overall maximum of 36 years of Pensionable 2.1.2. And what might I receive if I couldn’t work, but may Service that can be used to calculate your ill health be able to take another job or do some other form pension. The enhanced period of Pensionable Service of paid work? must not exceed the Pensionable Service that you This is known as ‘partial incapacity’. If you are retired could have completed up to your Normal Pension Date by the Company due to partial incapacity the benefits had you not had to retire early through ill health. 8

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3. PROTECTING YOUR FAMILY 3.1. DEATH BENEFITS The Gatwick Airport Pension Plan offers a generous level of life cover to help you provide for your family after your death. • The benefits that would be payable depend on whether you die while employed by the Company, after leaving the Company (but before retirement) or after retirement. • A pension will be paid to your Spouse or a Registered Civil Partner and any Eligible Children. • If you die while you are still working for the Company and contributing to the Plan, a cash sum will also be payable. • If you die leaving Eligible Children but no Spouse or Registered Civil Partner, then the rate of any children’s pensions payable will be increased by one third. 3.1.1. What if I die while employed? Cash lump sum – A cash lump sum equal to four times your annual salary at the date of your death will be payable. If you are a shift worker, an additional amount equal to four times the rate of your shift pay at the date of your death will also be payable. You can nominate who you would like to receive this benefit and how you would like the cash sum to be split between them. Partner’s pension – Your Spouse or Registered Civil Partner will be paid a pension of two-thirds of the pension you would have received had you continued working until your Normal Pension Date. If you are a shift worker, this pension will be calculated taking into account additional Shift Credits you would have received had you continued with the same level of shift work you were undertaking as at the date of your death. 10

Children’s pensions – Eligible Children will receive a pension of up to one quarter of your partner’s pension. And, if you die leaving children but no Spouse or Registered Civil Partner, the rate of the children’s pension will be increased by one third. 3.1.2. What if I die in retirement? Your Spouse or Registered Civil Partner and any Eligible Children will receive a pension from the Plan. Your partner’s pension will be two-thirds of the pension you were receiving at the date of your death. Any children’s pensions are calculated in the same way as they would have been if you had died while employed. If you die within five years of retiring, the pension you were receiving, together with any increases that would have been applied, will be paid to your Spouse or Registered Civil Partner for the remainder of the five years, before these terms apply. 3.1.3. What if I die after I have left the Company but before retirement? Both a partner’s pension and children’s pensions are payable. A partner’s pension would be based on 50% of the benefits you have built up in the Plan at the date of your death; children’s pensions would be calculated in the same way as they would have been if you had died while employed.

Technical details While the Trustees will take into account the information you give on your Expression of Wish form, they are not legally bound by it. This means that they can determine who is to receive the cash sum and it enables payment to be made very quickly directly to your beneficiaries. Normally, this sum is not subject to Inheritance Tax. You should be aware that common law Spouses, partners who are not Registered Civil Partners and other dependants have no automatic entitlement but may be granted a pension at the Trustee’s discretion (subject to the Company’s consent). If you wish to inform the Trustee of your personal circumstances, you should write to the Pensions Team using the address at the front of this booklet. If you have more than two Eligible Children, the benefit that is payable will be split equally between all Eligible Children. The partner’s pension is payable for life and is therefore unaffected by remarriage. Partners’ and childrens’ pensions will be paid monthly in arrears and will be subject to the same increases as retirement pensions.

3.1.4. How do you know who I would like to receive any lump sum benefits if I die? To ensure that the Trustee knows who you would like to receive these benefits should you die, you should complete an Expression of Wish form. You can change your mind about who you would like to receive these benefits by completing a new form at any time.

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4. SUPPORTING YOUR MEMBERSHIP benefits, please contact the Pensions Team using the details at the front of this booklet.

4.1. WHO PAYS You make a fixed contribution towards your pension and the balance of the cost of providing all these benefits is the responsibility of Gatwick Airport Limited. • You contribute 5% of your Pensionable Salary and if you are a shift worker you also contribute 5% of your shift pay each month, but the cost to you is less than this as you normally don’t pay tax on pension contributions.

Example: A member has an annual salary of £20,044. For the purposes of the example, it is assumed that the salary figure does not change over the year and that the Lower Earnings Limit is £5,044. The member’s Pensionable Salary is worked out as: £20,044 - £5,044 = £15,000 a year

• The Company pays the balance of the costs of providing all the benefits as well as the expenses of running the Plan. • You can choose to pay additional contributions to increase the promised level of pension you will receive at retirement. 4.1.1. How do I pay? Your contributions are deducted from your salary on a monthly basis before tax. This means that you will pay less tax as you will not be taxed on the amount contributed to the Plan. While you will receive a Basic State Pension at retirement, regardless of your pension under the Plan (provided that you satisfy the Government’s separate rules on this pension), the Plan replaces part of the additional retirement benefits (State Second Pension) that would normally be paid to you by the State, so you will also pay a reduced rate of National Insurance (NI). 4.1.2. Can I pay to get an even better pension? If you wish to boost the pension benefits you receive at retirement, the Gatwick Airport Pension Plan allows you to pay additional contributions in order to receive Added Years of Pensionable Service. You may pay for these Added Years either by monthly deductions from your salary or by a one-off lump sum payment. To find out what it may cost to increase your pension 12

Member contributions to the Plan are calculated as: £15,000 x 5% = £750 a year

But there are two savings to reduce the actual cost: i) Tax relief £750 x 20% = £150 ii) Reduced NI contributions £15,000 x 1.6% = £240 (This calculation is based on current NI rates) Total saving = £150 + £240 = £390 a year The actual (net) cost to the member is therefore: £750 - £390 = £360 a year, or £30 each month

4.1.3. Can I increase the pension I will receive by transferring in benefits or pension savings from another scheme? You may be able to transfer in benefits or pension savings from another scheme in order to improve the pension you will receive from this Plan at retirement. Please contact the Pensions Team using the details at the front of this booklet to find out if you can transfer in and the additional pension you might receive. 4.1.4. How much does the Company pay? The Company pays the balance of the cost of providing the pension and life assurance benefits and the expenses of administering the Plan, after employee contributions have been paid into the Plan. The cost

of the pension and life assurance benefits provided by the Plan is significantly more than the cost of your contributions. The level of contributions required is determined on the advice of the Plan’s actuary who carries out regular reviews of the financial position of the Plan. 4.1.5. What happens to the contributions? Your contributions, along with those of the Company, are paid into a fund which is invested to provide benefits for you and other Members of the Plan when they become due. The fund is set up under trust and its finances are kept quite separate from those of any of the participating employers. Technical details The Government has set an ‘Annual Allowance’ or limit to the amount by which all your pension savings can grow in a year, before being subject to tax. For the 2011/12 tax year the Annual Allowance is expected to be £50,000. For defined benefits schemes like the Plan, pension savings means the HMRC valuation of the benefits being earned, not just your personal contributions. While this will have no effect on the overwhelming majority of Plan Members, if you believe that you could be affected, or intend to make large contributions to other pension arrangements outside the Plan, you should seek your own tax advice. Your contributions will cease when you have completed the maximum of 36 years of Pensionable Service. The level of contributions you are required to pay may change in future, but if this happens, you will be consulted in advance. The Trustee of the Plan is required to publish and keep under review a Statement of Investment Principles, which explains its thinking behind how the assets of the Plan are being invested. You can obtain a copy of this document by contacting The Pensions Team. 13

5. SPECIAL INFORMATION FOR PART-TIME EMPLOYEES OVERVIEW

5.2. PENSIONABLE SERVICE

• You are eligible for the full range of benefits offered by the Plan.

Your Pensionable Service will be expressed in terms of your equivalent full-time Pensionable Service.

• To ensure you receive a full and fair level of pension benefits, the Pensionable Salary and Pensionable Service for part-time workers are expressed as a proportion of the full-time equivalent.

This means that your Pensionable Service will be lower than the number of years you have been a member of the Plan.

5.1. PENSIONABLE SALARY • Your Pensionable Salary will be expressed in terms of your equivalent full-time Pensionable Salary. • This means that your Pensionable Salary will be higher than your annual basic salary. • Your contributions will be based on your salary before it is multiplied to reflect full-time hours (ie your annual basic salary less the appropriate proportion of the Lower Earnings Limit). Your Pensionable Salary will be calculated as follows:

(

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A proportion of the Lower Earnings Limit (reflecting the proportion of part-time hours worked) x Contractual hours for the equivalent full-time position Actual contractual hours

Your Annual – Basic Salary

)

Your Pensionable Service will be calculated as follows: Actual Your Contractual length of Hours membership x Contractual (in years, Hours for the counting equivalent days) full-time position Technical details: These calculations have no effect on Members who have part-time service only, but ensure that a member with both full-time and part-time service, or whose contractual hours change, is credited with the correct total period of Pensionable Service.

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6. YOUR QUESTIONS ANSWERED 6.1. HOW DO I JOIN? The Plan is now closed to new entrants. If you joined BAA on a temporary or apprentice contract prior to July 2008 and were offered membership of the BAA Pension Scheme on becoming permanent, then you will be allowed to join the Plan if you become a permanent Gatwick employee.

However, as a member of the Gatwick Airport Pension Plan, the amount you will receive (if any) in earningsrelated top-up will be lower for the years that you are a contributing member of the Plan, but you will pay less National Insurance to reflect this. Further details on the pension benefits you might receive from the State are included in section 8 ‘State Pension Benefits’.

6.6. WHERE CAN I GO IF I HAVE ANY MORE QUESTIONS? If you have any more questions, please contact either the Pensions Team – please see contact details at the front of this booklet. 6.7. WHERE CAN I GO FOR ADVICE ABOUT MY PENSION?

6.2. WHAT IF I WANT TO OPT OUT? 6.5. WHAT HAPPENS IF I LEAVE THE COMPANY? You can decide to opt out at any time by informing Gatwick HR at least one month before you wish your contributions to cease. Note that if you decide to opt out you will not be permitted to re-join the Plan in future. 6.3. HOW DO I KNOW WHAT PENSION I WILL RECEIVE? Each year you will be sent a benefit statement while you are still a contributing member. The statement will detail the level of pension you might receive if you continue working until your Normal Pension Date. 6.4. WILL MY PENSION FROM GATWICK AFFECT THE PENSION I RECEIVE FROM THE GOVERNMENT AT RETIREMENT? Your basic state pension will not be affected by payments from the Gatwick Airport Pension Plan. The Government also provides an earnings-related top-up to this pension, known as the State Second Pension (S2P).

Don’t worry – you won’t lose your contributions. And if you leave the Company with more than 3 months’ Pensionable Service you will not lose the valuable benefits you have built up. However, generally speaking, the options available to you will depend on your length of Pensionable Service:

Neither the Company nor the Trustee can give you financial advice. You can find details of your nearest financial adviser at www.unbiased.co.uk.

• Over 2 years – you can keep the benefits in the Plan until you reach retirement, or you can transfer these to another pension arrangement. • 3 months to 2 years – you will be offered a transfer value to enable you to transfer these benefits into another pension arrangement. Alternatively, you will be refunded the value of your contributions minus a deduction for tax and an amount to reinstate you into the state second pension. • Up to 3 months – your contributions will be refunded minus a deduction for tax and an amount to reinstate you into the state second pension. More detailed information on the options available will be provided to you should you leave the Company before retirement.

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7. GENERAL INFORMATION 7.1. MANAGEMENT OF THE PLAN The Gatwick Airport Pension Plan is established under a trust administered by a trust company board of directors (known as Trustees). The board comprises Trustees appointed by the Company and Trustees who are member representatives. The Trustee is responsible for ensuring the correct management of the Plan and call upon the expertise of professional advisers in order to run the Plan. These include investment managers, actuaries, auditors and solicitors. 7.2. TAX APPROVAL The Plan is a ‘registered scheme’. This means that it is registered by HM Revenue & Customs. Various tax advantages are available to registered schemes: • You receive income tax relief on your contributions to the Plan up to the Annual Allowance. • The income received from the investment of the Plan’s assets is largely free of tax. • Cash sums payable on retirement are free of tax subject to the Lifetime Allowance. • All pensions are treated as earned income and are taxed under the PAYE system. • The Trustee of the Plan is liable to pay tax (currently at 20%) on refunds of contributions and a deduction to cover this liability is made from the refunds to Members who withdraw. 7.3. AMENDMENTS TO THE PLAN The Company intends that the Plan should continue. However, it may be amended or discontinued at any time. In the event of the Plan being discontinued, the assets of the Plan would be used to provide benefits in accordance with the trust deed. The funding of the 18

Plan is designed to ensure that the assets would at all times be at least sufficient to provide Members’ accrued rights. Legislation requires the Company to top-up the Plan’s resources if it falls short on a statutory measure.

There will be no time limit for bringing complaints except those required by law. You should expect to receive a decision within two months, or the period determined by law.

7.4. ASSIGNMENT OF BENEFITS You must not attempt to assign your future benefits to obtain cash payments or as security for loans. Under the rules, there could be no legal claim on the Plan. Your benefits would cease to be payable and would come under the control of the Trustee for payment at its discretion. 7.5. TEMPORARY ABSENCE Membership of the Plan is unaffected during a period of temporary paid absence (due to maternity leave, sickness or accident), provided that contributions continue to be paid and you are regarded as still being in service. In cases of temporary absence for any other reason, continued membership will depend on individual circumstances. Any unpaid absences will not count for pension purposes. 7.6. DISPUTE PROCEDURE

You can obtain a copy of the IDRP from the pensions pages of MyHR on the Gatwick Intranet, or from LCP whose contact details are on page 5 of this booklet. 7.7. OTHER ORGANISATIONS Any member or beneficiary of a pension scheme can write to The Pensions Advisory Service (TPAS) at any time for help in connection with any pension queries they may have. TPAS is based at 11 Belgrave Road, London, SW1V 1RB (Telephone 0845 601 2923; Website www.pensionsadvisoryservice.org.uk). Members and beneficiaries can also approach the Pensions Ombudsman (based at the same address as TPAS, Telephone 020 7630 2200). The Pensions Ombudsman has the power to investigate and determine complaints or disputes of fact or law in relation to occupational pension schemes.

7.8. DATA PROTECTION ACT Both the Trustee and Gatwick Airport Limited are registered under the Data Protection Act 1998. You should be aware that various forms in relation to the Plan incorporate your specific consent to our holding and processing of data in accordance with the Act. 7.9. PLAN INFORMATION In addition to this booklet, the following items are issued to Members: • Your annual benefit statement, which updates you on the level of benefits that is building up for you and your family following your death; • The Trustee’s newsletter to Members designed to bring you news and information about the Plan and wider pension issues; and • Information about increasing your contributions to receive ‘Added Years’ of Pensionable Service is available on request. 7.10. PLAN DOCUMENTATION

Complaints about the Plan are rare and are generally resolved informally. However, if you are not happy with the result of the informal process, there is a formal procedure for resolving disputes, known as the internal disputes resolution procedure (IDRP)

There is a further organisation involved in the proper management of pension schemes – the Pensions Regulator. The Pensions Regulator was created under the Pensions Act 2004. Its top priority is to tackle risks to Members’ benefits.

You will need to put your case in writing to the Trustee at the address at the front of this booklet. You should provide as much information as you can (as well as including details such as your full name, address, date of birth and National Insurance number).

Its principal aim is to prevent problems from developing and it has powers to investigate schemes and enforce action where necessary. Together with the Trustee’s professional advisers, The Pensions Regulator is responsible for ensuring that all pension schemes satisfy the terms of the Pensions Act. The Pensions Regulator can be contacted at: Napier House, Trafalgar Place, Brighton, BN1 4DW (Telephone 0870 606 3636; Website www.thepensionsregulator.gov.uk).

You may decide to use a representative to act on your behalf. If so, you should include the name and address of your representative and state whether correspondence should be addressed to him or her.

As a member of the Plan, you can ask to see the following items (and in certain cases request your own copy): • Trust Deeds and Rules; • The latest Actuarial Valuation; • Formal Trustee’s Annual Report and Accounts; • The Plan’s agreed Schedule of Contributions; • The Trustee’s Statement of Investment Principles.

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8. STATE PENSION BENEFITS In addition to the pension you will receive from the Gatwick Airport Pension Plan (“the Plan”) at retirement, you may also receive a pension from the state. There are two parts to the state pension: • The Basic State Pension – this is what most people think of as the ‘old age pension’; and • An additional earnings related top-up – which is currently called the State Second Pension.

• You will not have built up any additional pension through SERPS; and • You will not be eligible to build up full S2P benefits: If you are earning more than £32,200 you will not build up any S2P pension; or If you are earning less than £32,200 you may still be able to build some S2P pension, reflecting the more generous State provision for low and moderate earners.

• For every five weeks you delay drawing your pension, you will receive and Extra State Pension of 1% of the weekly state pension you would have received at your State Pension Age. This equates to an additional 10.4% for each year of delay. • If you delay taking your state pension for more than 12 months you can choose to take a taxable lump sum (of the payments you missed and compound interest on the missed weekly pension payments) instead of taking the additional pension.

Example: The current Basic State Pension is £97.65 per week. If you were to delay claiming your pension for a year you would receive £107.81 per week instead. In this case the Extra State Pension would be £10.16 per week.

8.1. THE BASIC STATE PENSION The maximum Basic State Pension is currently worth £97.65 a week (£5,077.80 a year) for a single person or £156.15 a week (£8,119.80 a year) for a married couple. This amount is increased by the Government each year, • This is a flat rate pension paid to everyone with a sufficient National Insurance contribution record. • The amount you will receive will depend on how long you have been working and paying National Insurance contributions. • Membership of the Plan does not affect your eligibility to receive the Basic State Pension. 8.2. AN ADDITIONAL PENSION This is an earnings-related top-up to the Basic State Pension. On 6th April 2002, The State Second Pension (S2P) replaced SERPS (the State Earnings Related Pension Scheme), which was introduced as a top-up to the Basic State Pension in the 1970s. • As a member of the Plan you pay lower levels of National Insurance contributions and therefore:

Technical details N.B. All figures relate to the 2010/2011 tax year. The Government may change the pension benefits offered by the State. For example, they have indicated that they intend to change the additional pension from an earnings-related pension to a flat rate pension, although there has been no firm indication of when this might happen.

Please note: • Your state pension cannot be claimed before your State Pension Age. • You must draw all the state pension benefits you are entitled to from the same date, whether this is the Basic State Pension, the State Earnings Related Pension or the State Second Pension. Although the option to delay taking your state pension may be tempting, it is not suitable for everyone. For example, it may mean you need to continue to work in order to bridge the gap between State Pension Age and the date you start claiming your state pension benefits, where you do not have an alternative source of income.

8.3. IMPROVING YOUR STATE PENSION BY RETIRING LATER Many people think that the date at which they can draw their state pension is fixed at the State Pension Age, currently age 65 for men and between age 60 and 65 for women. (Women’s State Pension Age is changing gradually from 60 to 65 from between 6 April 2010 to 6 April 2020.) However, for some time it has been possible to delay taking your state pension until after this age and then receive an increased state pension. The difference between the normal rate of state pension and the increased rate of state pension is known as Extra State Pension.

The decision about whether to delay claiming state pension benefits will depend on your financial circumstances. If you are thinking of deferring your state pension, you should take independent financial advice. If you want to know what level of pension income you are likely to receive from the state at retirement, you can ask for a forecast of your likely State benefits by completing form BR19 available at your local Social Security or Pension Service Office or online at http:// www.thepensionservice.gov.uk/atoz/atozdetailed/ rpforecast.asp

• You can delay taking your pension benefits for a minimum of five weeks up to a maximum of five years.

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9. GLOSSARY Added Years You can choose to pay a higher level of contributions in order to increase your level of Pensionable Service – the time added to your Pensionable Service is known as ‘Added Years’.

Lower Earnings Limit This is the minimum amount you have to earn before you start earning the State Second Pension.

Annual Allowance This is the limit to the amount by which your pension savings can grow in a year, before being subject to tax. It has been set at a high level (£50,000 from April 2011) and so is unlikely to apply to many Members.

Members These are all employees who are contributing Members of the Plan. You will remain a member until you stop contributing to the Plan (either because you leave Gatwick’s employment or because you decide to stop contributing, or because you retire and become a ‘Pensioner’).

Company Gatwick Airport Limited.

Normal Pension Date This is the date of your 60th birthday.

Eligible Children Will include any child or children of a member (including a legally adopted child or step-child) under the age of 18 or, if still in full-time education, up to the age of 23.

Pensionable Salary This is your annual basic salary plus any other amounts that are stated as pensionable in your contract of employment, less an amount equal to the Lower Earnings Limit.

Final Pensionable Salary This is this salary on which your benefits are based. It is the highest one-year average of your Pensionable Salary in the last three years of Pensionable Service. Lifetime Allowance This is the limit on the value of the pension that will qualify for tax relief. This limit will apply to all of the benefits you build up over your entire life. This limit is high enough not to affect most people (it was £1.8m in April 2010, although the Government announced in October 2010 that it will reduce to £1.5m at some point in future). Any benefits in excess of this limit can be taken as a pension or cash after a deduction for tax. 22

Pensionable Service This is normally your period of membership of the Plan together with any period of membership of a previous employer’s scheme from which benefits have been transferred to the Gatwick Airport Pension Plan. Pensionable Service ceases when you retire and is subject to a maximum of 36 years. Plan The Gatwick Airport Pension Plan.

Registered Civil Partner A Registered Civil Partner is someone who has entered into a ‘Civil Partnership’ with another member of the same sex. Civil Partnerships allow same sex couples to be treated for legal purposes in the same way as married couples. Shift Credits Shift Credits are earned by shift workers, and are additional periods of service, added to their Pensionable Service each year, to reflect the difference between their Pensionable Salary and the additional amount earned in Shift Pay. Shift Credits can take your Pensionable Service over 36 years. Spouse This is the person with whom you have been through a lawful ceremony of marriage. Partners, (who are not ‘Registered Civil Partners’). Common law Spouses or other dependants have no automatic entitlement but may be granted a pension at the Trustee’s discretion (subject to the Company’s consent). Trustee(s) This means either Gatwick Airport Pension Trustees Limited, or the directors of that company, as the context requires. As at October 2010 there are six Trustee directors, three of whom are appointed by the Company and three of whom are elected by Members.

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Every effort has been made to ensure that this booklet is an accurate summary of the Plan at the date of issue (November 2010). It is, however, only a summary and precise details of the benefits and the provisions governing the Plan are contained in the Trust Deed and Rules of the Plan (as amended from time to time). In the event that there are any differences between the provisions described in this document and the Trust Deed and Rules, it is the Trust Deed and Rules which take precedence. You can obtain a copy of the Trust Deed and Rules from the Plan administrator, Lane Clark & Peacock LLP, whose details can be found on page 5.

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